WASHINGTON -- A bipartisan group of Senators led by Tom Harkin (D-IA) and John McCain (R-AZ) has authored legislation designed to encourage wider circulation of dollar coins and set a timetable for phase-out of the $1 banknote. Titled the Currency Optimization, Innovation and National Savings Act (COINS), S.2049 was introduced in the Senate on Jan. 31. Sens. Tom Coburn (R-OK) and Mike Enzi (R-WY) joined the bill's authors in the introduction.

At this writing, the text of S.2049 has not been released by the Government Printing Office. The measure is described as a companion bill to the COINS Act in the House (HR.2977), introduced last September by Rep. David Schweikert (R-AZ). The House bill currently has the bipartisan support of 11 cosponsors. | SEE STORY

The Senate authors explained that the reasoning behind the COINS Act is bolstered by a great deal of study and experience. The General Accounting Office has examined the question five times -- in 1990, 1993, 1995, 2000 and 2011-- and reached the same conclusion every time: "The U.S. should transition away from a $1 note and move to a $1 coin." The numbers vary in each report, but the GAO has estimated annual savings of anywhere from nearly $200 million to more than half a billion dollars from making this transition.

Virtually every modern economy has made the switch from low-value banknotes to higher-denomination coins, Sens. Harkin and McCain continued. Most major western countries have made this move "without so much as a ripple of impact to businesses or consumers."

All of those nations saved a great deal of money by doing so. In fact, according to reports from the Canadian government, the country saved at a rate 10 times the initial government projections when Canada replaced its $1 note with the "Loonie" coin 25 years ago. Countries with coins worth more than a dollar include Canada, Great Britain, Japan, the Euro Zone nations, Australia and Switzerland, among many more.

"The dollar coin will save money for those engaged in a large number of transactions like large retail stores, vending machine operators and transit agencies," Sens. Harkin and McCain predicted. A study by the Philadelphia transit agency, for example, showed that it is three and a half times cheaper to process coins than notes.

The $1 coin is durable and environmentally friendly, the COINS Act's sponsors pointed out. Most $1 bills currently in circulation were made within the last three years. Dollar coins officially last 30 years, so a single one can do the job of at least 17 dollar bills over its useful life. When the coin -- made almost exclusively from existing scrap metal -- is pulled from circulation, it is 100% recyclable. By contrast, the government disposes of 7,600 tons (15.2 million lbs.) of currency paper waste every year.

The COINS Act is supported by the Dollar Coin Alliance, a coalition of American small businesses, budget watchdogs, trade associations and private companies striving to move the United States toward an economical, environmentally friendly dollar coin. Members include Citizens Against Government Waste, the International Association of Machinists, the National Bulk Vendors Association, Southeastern Pennsylvania Transportation Authority, Tri-State Automatic Merchandising Council and United Steelworkers. The American Amusement Machine Association, while not a member of the Alliance, has made several visits to the nation's capital to meet with lawmakers about phasing out the dollar bill.

The companion House bill specifies a timetable under which the phase-out of the $1 bill would begin after $1 coins attain sufficient market penetration to demonstrate that consumers and businesses are comfortable using them; 600 million of the coins circulating annually would provide that demonstration. Alternately, the move would be made four years after enactment of the law.

At that time, Federal Reserve banks no longer would be able to order additional $1 notes, although they could continue to place $1 notes on hand into circulation for a year. These banks also would continue to remove unfit currency from circulation and destroy it, as they do now. The Federal Reserve System would continue to produce $1 notes from time to time, to meet the needs of collectors